Pa. getting out of the alcohol business

A plan to change how alcohol is sold in Pennsylvania has drawn a mix of praise and concern from local lawmakers, businesses and industry groups.

Gov. Tom Corbett is making his pitch to privatize state wine and spirits stores and allow beer and wine to be sold in retail stores.

Supporters say the state's alcohol laws are antiquated and changes are long overdue, while others are worried about the impact it will have on small businesses and access to alcohol.

The plan calls for auctioning 1,200 wine and spirit retail licenses - 800 for large stores (more than 15,000 square feet) and 400 for small stores. The licenses would be allocated by county, based on historic sales, population and population density.

New categories of beer and wine licenses would be created for big box stores, grocery stores, convenience stores and pharmacies. Estimates assume 5,000 of these licenses sold, but a spokesman for the governor's office said there are no limits for the number of licenses.

Under current law in Pennsylvania:

- Distributors can sell only cases or kegs of beer;

- Bars, restaurants or hotels can sell two six-packs of beer;

- State-run wine and spirits stores can sell wine and spirits;

- Wine cannot be shipped directly to a consumer.

Under the proposal:

- Private-run wine and spirits licensees can sell wine and spirits;

- Distributors can buy an enhanced license to break cases and sell wine. Distributors can also bid on one of the 1,200 wine and spirits licenses;
- Grocery stores can sell wine and two six-packs of beer;

- Convenience stores can sell one six-pack;

- Big box stores can sell wine and cases of beer;

- Direct shipping of wine is allowed.

New licensees would be required to use an ID scanner, and additional money from license surcharges and increased fines would be set aside for enforcement efforts.

Wine and spirits stores would be closed incrementally through the auction process.

Local data

Displaced employees would be eligible for training and education grants and be given preference in other civil service or non-civil service jobs. Employers who hired displaced employees would receive tax credits.

The proposal drew mixed reviews from local legislators.

"It's high time, long past overdue, for Pennsylvania to get out of the liquor business," Rep. Dan Moul, R-Gettysburg, said in a statement. "We have a monopoly on it. That's really not the role of government to monopolize a particular business. We can still regulate and we can still enforce - and enhance enforcement - and education is going to get a shot in the arm to boot."

Rep. Todd Rock, R-Mont Alto, said it always seemed odd for the state to be in the alcohol business but has concerns about how the licensing changes would affect businesses.

"Beer distributors right now have invested a ton of money and I don't want to do something that would put them out of business. That's very concerning to me. It's difficult for me to say if I'm on board," he said. "There are no easy answers. What he's laying out and what we will vote on will be something completely different."

Rep. Rob Kauffman, R-Chambersburg, said selling liquor should not be a core function of government, but he has fielded concerns about increased access to alcohol.

"Obviously people want convenience, better selection, and prices, but concerns have been raised regarding just having it in the supermarket along with the milk, eggs and bread, and the cultural things that come," he said. "Some things folks are not totally comfortable with.

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Like lawmakers, the industry response has been mixed.

The Pennsylvania Chamber of Business and Industry echoed the local GOP delegation in saying that the liquor business is not a core function of state government. The group said a private system would improve the buying experience for customers.

Sheetz has been a vocal proponent for change in Pennsylvania's beer laws.

Unable to sell beer in its convenience stores, the Altoona-based chain has been able to sell beer in a "convenience restaurant." A similar model is planned in Shippensburg.

"We have been lobbying for adult beverage sales reform for a long time," Louie Sheetz, executive vice president, marketing, said in a statement this week. "Although Gov. Corbett's proposal is centered around liquor, we are very excited that beer sales are part of the consideration. Allowing the private sector to manage the sale of alcoholic beverages is long overdue."

However, Sheetz said, the plan is restrictive with quantity limits and licenses, and by requiring annual renewal, would be expensive.

Under the proposal, stores seeking a new beer/wine license would pay an initial fee between $10,000 and $35,000 depending on the type of store.

There would also be an annual renewal fee and an extra fee for Sunday sales.
Pennsylvania and Utah are the only two states that have total control over wholesale and retail operations of liquor sales. A poll released Thursday by Franklin & Marshall College found 53 percent of the state's registered voters support selling the state-owned liquor stores to private companies.
Pennsylvania is also one of only a few states where you cannot buy beer or wine in a grocery or convenience store.

But some worry the added convenience of being able to by beer in a grocery or convenience store comes at a cost to smaller businesses, particularly beer distributors.

Wendell Young IV, president of UFCW Local 1776, which represents 3,500 state liquor store employees, said he is concerned about the impact Corbett's plan would have on state store employees, as well as the thousands who work at beer distributors.

"The reality is the big box retailers will end up dominating the landscape like they do in other states that have gone that wide open," he said. "After buying the license, they already have the brick and mortar locations and employees, so they will reallocate workspace and work force to accommodate beer, wine and spirits. There will be very little new jobs created in this industry as a result."

The Malt Beverage Distributors Association of Pennsylvania compared the proposal to "asking a horse that has been stabled and unable to train to successfully run the Kentucky Derby against the best thoroughbreds in the world."

"We're concerned about anything that impacts our industry, but until it passes, it's all speculation. We're hoping for the best and we'll roll with whatever happens," said Charlie Lambert, manager at In & Out Beverage in Chambersburg. "But we are hopeful that whatever changes happen, we can turn into opportunity rather than have a negative impact. We remain optimistic."

Amy Christie, executive director of the Pennsylvania Licensed Beverage Association, said her group has not taken an official position on the plan, though members are worried about the effect on license values.

"Once you flood the market with new outlets, we feel it will devalue the small business licenses they had to purchase," she said. "Because for a lot of our members, that's their retirement."

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Marcus Rauhut can be reached at mrauhut@publicopinionnews.com and 262-4752, or follow him on Twitter @MarcusRauhutPO.

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